SAP jumps into on-demand ERP market

29.01.2007
In an apparent about-face, SAP AG will roll out a full set of on-demand business applications specifically geared toward midsize companies looking for the benefits of ERP software without the hassle of installing it in-house.

SAP historically has pushed companies to install and run SAP software within their own four walls. Responding to market pressure from smaller, more agile start-ups such as Salesforce.com Inc., SAP just last year offered its first on-demand product, a CRM application. Last week, SAP CEO Henning Kagermann said his company will offer a complete set of hosted and on-demand applications for mid-market customers that want to get applications up and running quickly with very little customization.

Customers will be able to set up and test the software on their own before making a purchase, using what Kagermann called a "try, run and adapt" model. "We assume customers will set up their own test system and play around with their own data," he said. "We want to eliminate risk altogether."

Although the exact details remain unclear, SAP's move could be a market-changing decision, said Rodney Masney, president of the Americas' SAP Users' Group (ASUG). "This will change the industry and support SAP's midmarket play," he said.

Masney, who is also global director of IT infrastructure at Owens-Illinois Inc., a Toledo, Ohio-based maker of packaging materials, said SAP made its strategic decision partly at the urging of ASUG. "The idea of providing the platform to the midmarket without paying the infrastructure costs or deployment costs with a rapid implementation certainly will play with midmarket customers," he said.

Masney said Owens-Illinois will be among the ASUG members looking into the on-demand offering when it becomes available.